Why, you may wonder, was the EU bothering with a freight inquiry at the far end of the world?

Two reasons. The EU - through its competition arm, 'DG Comp' as it's known - had an interest because it had relatively recently (2008) abolished the shipping lines' exemption from cartel laws in Europe. And because it wanted to tell us that it thought the case for allowing shipping cartels (as we were doing at the time) was a load of cobblers.

DG Comp said that more countries were bringing shipping under the competition law or had never exempted them in the first place: "exempting container shipping cartels can hardly be described as the global regulatory standard" (para 9). And it pointed out that "the EU repeal is very significant in that it expressed the unanimous agreement of the then 25 EU Member States. Any Member State could have vetoed the proposed legislation. Yet all Member States chose to support" (para 7). In other words, getting the whole 25 to agree on anything is normally a colossal exercise in cat herding, but the case for getting rid of shipping cartels was so obvious that even the fractious 25 were all on board.

DG Comp also said that if the shipping lines' argument for cartels - "stable rates and reliable services" (para 12) - had any merit, then exporters and importers would support them, but they don't: "the shippers have repeatedly stated that they would rather have competitive prices than stable high prices" (para 12). And the shipping lines' claims about the downside of abolishing cartels - "exemption would lead to "destructive competition", increased concentration, lack of investment and reduced service" (para 13) - had not been borne out by what had actually happened in Europe when cartels got the flick.

And it made the excellent general point (para 14b) that

the liner industry is no different from other fixed-schedule, high-fixed costs transport industries (such as the airline sector or the rail sector) that function well under the standard competition law regime.

So the good news is that we did, after navel-gazing for nearly six years, see the sense of views like DG Comp's, and we finally brought shipping cartels within the general competition law. The bad news is that we continued to give the shipping lines special treatment, in particular allowing them to cooperate on "capacity adjustments in response to fluctuations in supply and demand for international liner shipping services" (s44A(8)(e) of our amended Commerce Act). If they end up having the ability to jointly determine capacity, then effectively they will have ended up with the ability to jointly determine prices, so we'd be back to square one as if price-fixing had never been outlawed. And there's a further bit of leeway in s44B relating to an exemption for "price fixing in relation to space on ship".

Another oddity of the special treatment for the shipping lines is that the amended Act (in sections 65A through 65D) introduced a new clearance regime for cartel provisions that are "reasonably necessary" for the purpose of a collaborative activity. If there is indeed, as the shipping lines argue, a necessary link between cartel provisions and running a shipping service, they, like any other group of businesses, have now got this new avenue to get the official seal of approval.

But no: it's one law for the rest of the country and one law for the shipping lines. And this for a sector that's been revealed to have been a global competition scofflaw.

Friday, 25 August 2017

It made for interesting reading. It was very largely on the side of the pro-competition angels: it showed a good appreciation of how more effective competition can improve our relatively low productivity and lower our relatively high prices. And as part of the process the Minister, Jacqui Dean, got the green light to publish Promoting Competition, a welcome programme of work that will be part of the overall Business Growth Agenda.

Mostly, the Cabinet paper got the 'market studies' bit of the review right. It picked up on the current inconsistencies - Cabinet itself had recently encouraged more market studies by the Telecommunications Commissioner (part of the Commerce Commission) while still not letting the rest of the Commission do the same, the Electricity Authority can run ones in its bailiwick - and pointed to the unsatisfactory outcomes when ersatz studies are run as a second best substitute.

As it said in para 55, "Following the conclusion of the Fuel Market Financial Performance Study it is likely that the Government will still not have a good understanding of the severity of competition problems in the market". Which is exactly where I'd got to: "This half-baked time round, we ended up with just about the worst outcome, for everyone, of suspicions left unresolved. And we're now going to have to do the full, proper inquiry that should have been done in the first place". No offence, as I also said before, to the professional folk who did the petrol study: the problem was the mandate, which tried to do a quick and poorly scoped study, on the cheap, without full information gathering powers.

It was good, too, that for market studies "the funding approach should be agreed at the same time" (para 57): there have been times when the Commission's got lumbered with new jobs but no new money to do them. As the paper said (para 57 again), "if the power is granted but not funded and the Minister directs the Commission to use it then the Commerce Commission is forced to trade off their adjudicative or enforcement activity with work on market studies. This would be detrimental to the competition regulatory system as a whole". Quite right, so there's going to be a (maximum of) $1.5 million a year allocated. I quite like the idea of a maximum, and I'm sure businesses will do, too: it should act as an efficiency incentive on the Commission.

But the Cabinet paper dropped the ball when it came to letting the Commission initiate market studies. It reviewed international practice, and found that as a general rule competition authorities could either initiate on their own, or it was a policy combo where authorities could initiate on their own, but could also be asked to do one: "A small number can only undertake a study if it is externally initiated (e.g. by Ministers)". And then the Cabinet paper opted - very oddly in my view - to go with the "small number" rather than with international standard practice, and then only with additional controls that require the Minister to satisfy a "why do this" test and get the buy-in of Cabinet as a whole.

There was, I felt, a tone in this part of the paper that an empowered Commission might go rabid, and that the Rottweiler consequently needed to be well chained up. Paragraph 53 went to some pains to point out that even after been given these (constrained) market powers, there would still be lots of other constraints that would stop the Commission running amok and biting people. If I were having a quiet word in the Commission's ear, I think I'd be advising it to do more to polish up its perception in political circles. And I'd especially be encouraging it to point out - if politicians have been hearing too much from businesses not fond of the Commission - that the primary victim of business rorts can very often be other businesses.

Which brings us to section 36, and anti-competitive use of market power. As readers will know, I think the current law is an ass, and want it changed to match Australia's, and have said so in various places. But those of us of that view (including the ACCC, the Commerce Commission and Consumer NZ) were in the minority in submissions to MBIE's targeted review. So the law is not going to get changed, at least for now.

That said, I think I can live for the time being with where the Cabinet paper got to. For one thing, the Minister said (para 71) "I am of the view that there are problems with section 36 and that it is an important provision to get right in a small market like New Zealand". She went on to qualify that, but I intend to regularly requote the first part of that sentence in particular, and in various tones of voice: "there are problems with section 36", "there are problems with section 36".

In any event it makes some pragmatic sense, as proposed in the paper and also supported by Treasury, to spend the next year and a bit researching how big a problem we might or might not have with abuse of market power, and also waiting to see how the Aussies get on with their reformulated version of the law, assuming it gets through the madhouse that is the Aussie Senate.

Towards the end of the paper, paragraph 123 reads

Legislative change to the Commerce Act will be required in relation to cease and desist, enforceable undertakings and market studies. In this regard, a Commerce Amendment Bill has a [word redacted] priority on the 2017 legislative programme.

I don't like that redaction. As a general rule, on any policy issue, I think a government should be prepared to tell us whether it thinks it's a big deal and we can expect something done about it soon, or whether it doesn't, and we shouldn't. In this particular case, given that the last amendment to the Commerce Act took nearly six years, I'm afraid that the word redacted could well be "low".

There's an interesting difference of opinion between Treasury and the Reserve Bank about the outlook for interest rates and the Kiwi dollar. For Treasury, "The Official Cash Rate is expected to begin rising in mid-2018 as the Reserve Bank seeks to achieve its objective of stabilising inflation at the 2.0% mid-point of its target range. From around 2.0% in June 2018, short-term interest rates are forecast to rise to around 3.8% in June 2021" (p20 of the Prefu). For the RBNZ, as it said in Table 2.1 on p11 of the latest Monetary Policy Statement, the OCR is going to stay where it is all the way out to late 2019. For what it's worth, the financial markets (going by current futures pricing) lean more Treasury's way.

The difference on interest rates feeds into different views of where the overall value of the NZ$ is heading. As shown below, the Bank has it peaking around now and then going on a progressive slide, whereas Treasury (in Table 2 of the 'Additional information' bit of the Prefu) have it rising a little more and then staying there.

Another thing to note is the scale of the fiscal boost to the economy. The headline numbers on fiscal surpluses don't tell you much about whether tax and spending plans boost or brake the economy: instead, the 'fiscal impulse' is a go at figuring out what fiscal policy is doing, once you've stripped out all the cyclical things that happen to the fiscal books (like good times boosting the tax take, as they are now).

Estimates of the impulse are always iffy, although other sighting shots at it have come up with much the same as Treasury's. Here it is (again from the 'Additional info').

After years of grinding away at rebuilding the state's coffers - six successive years of tighter fiscal policy - it's now all systems go, with a fiscal boost in the year to June '18 amounting to some 1% of GDP, plus a bit more the following year. People will have all sorts of reactions to that, from a cynical quelle surprise in election year, to why not address some real needs now that the money's more available (the Family Incomes Package is in that boost).

Dull and boring macroeconomists however are likely to say that loosening fiscal policy in good times - 'procyclical' policy as we call it in our game - isn't usually the best of plans, though I'm prepared to cut some slack when some of the boost also addresses our infrastructure shortfall.

The final thing worth digging out of these fiscal updates is the outlook for profits. New Zealand's a bit short on profits data: Stats are working on it, but we don't yet have quarterly profits numbers, unlike for example Australia, the UK or the US. So anything that throws some light on what is one of the key moving parts in a market economy is always welcome. That's where Table 3 in the 'Additional info' comes in handy, as it has forecasts for 'operating surplus, net' (profits, essentially) for both agriculture and the rest of the economy.

They're only annual, but it all helps. Here's what the numbers look like (percentage changes aren't in the original table, so I've added some).

Down the farm you can see the huge impact of the recovery in dairy prices from their previously dire levels. Elsewhere it's not been the profits bonanza you might have expected from such a decent run for the overall economy - another part of our productivity paradox, perhaps?

Wednesday, 23 August 2017

Earlier this week I mentioned that it had taken the thick end of six years for the Commerce (Cartels and Other Matters) Amendment Bill to work its way through the parliamentary grinder. It didn't help along the way that the government had second thoughts - or cold feet - about one of its original provisions, to criminalise hard core cartels, and yanked that bit. But on August 14 what was left of the Bill finally staggered over the finishing line.

Current exemptions for shipping companies from the Commerce Act should be removed so that normal competition laws apply. This change would outlaw any agreements between shipping lines that fix prices and/or limit capacity unless the Commerce Commission judges that their public benefits outweigh any anti-competitive detriments

In the event the Bill dealt to shippers price-fixing, but it did allow shipping lines to cooperate to do these "specified activities" listed in s44A(8) (provided they improve the service):

(a) the co-ordination of schedules and the determination of port calls;

(b) the exchange, sale, hire, or lease (including the sublease) of space on a ship;

(c) the pooling of ships to operate a network;

(d) the sharing or exchanging of equipment such as containers;

(e) capacity adjustments in response to fluctuations in supply and demand for international liner shipping services.

No doubt some of these activities could well be efficient and helpful for both the shippers and their customers. But you're also left with the feeling that if shipping lines are able to jointly set capacity, as in subsection (e), they've effectively been left with the ability to set price in any event.

Does it matter? Oh yes. In another of those odd coincidences that have been happening recently, shortly before our shipping provisions become law the Aussie courts fined NYK, a Japanese shipping line, A$25 million for being part of an enormous and long-running global shipping cartel. It was the second highest cartel fine in Australia (behind the A$36 million fine on Visy Board in 2007 for a cardboard packaging cartel) and the first case under Australia's criminalised cartel regime.

As the judgment makes clear, NYK and a bunch of other shipping lines had been operating a global cartel since 1997. At [46] it says

From at least February 1997, NYK and a number of other shipping companies, including the [eight] Carriers [servicing Australia], had arrived at an arrangement or reached an understanding to the effect that, as a general proposition, they would not seek to alter their existing market shares or otherwise win existing business from each other. That overarching arrangement or understanding was generally referred to as “maintaining the status quo” or giving and receiving “respect”. It may conveniently be called the “Respect Agreement”.

The "Respect" agreement - I rather like the overtones of Mafia protocol - had everything a cartel prosecutor could ask for: not just the 'freight rate provision' (price-fixing) but also a 'bid rigging provision' and a 'customer allocation provision'. And it had all the cloak and dagger stuff of your hard core cartel. At one point NYK's internal compliance people got antsy, for example, so the managers involved decided to tighten up security. At [158]

NYK employees in the Car Carrier Group continued to engage in communications with their counterparts at the other Carriers. Those communications were generally conducted orally over the telephone or in face-to-face meetings. They were rarely documented. Where the discussions were conducted by telephone, the employees generally conducted the conversations away from their desks, in hallways, lift lobbies, outside the office or in a room referred to as the “phone booth”. The phone booth was a small, glass enclosed room about the size of a phone booth. Some employees were specifically instructed to conduct such telephone calls away from their desks to minimise the risk of junior staff overhearing the conversation and reporting the conduct to the Fair Trade Promotion Group.

NYK was lucky in a way. It has been up to its ears in proceedings in other jurisdictions: the judgment mentions Japan, the US, South Africa, Chile and China, and it is likely others have yet to surface. But in Australia it pleaded guilty, fully cooperated with the Director of Public Prosecutions and the ACCC, expressed genuine contrition, and explained that it have made real efforts to improve head office culture, including withdrawing from all shipping line 'conferences' it used to be party to. As a result it got a 50% discount on what would otherwise have been a stonking A$50 million fine. As Justice Higney concluded at [300]

Cartel conduct of the sort engaged in by NYK warrants denunciation and condign punishment. It is inimical to and destructive of the competition that underpins Australia’s free market economy. It is ultimately detrimental to, or at least likely to be detrimental to, Australian businesses and consumers. The penalty imposed on NYK should send a powerful message to multinational corporations that conduct business in Australia that anti-competitive conduct will not be tolerated and will be dealt with harshly. That is so even where, as here, the decisions and conduct are engaged in overseas and as part of a global cartel. As has already been explained, but for NYK’s cooperation and willingness to facilitate the administration of justice, the penalty would have been substantially higher. That should serve as a clear and present warning to others who may have, or may be considering or planning to, engage in similar conduct.

You'd wonder, though. If the NYK judgement had come out a year or two back, rather than this month, would the Minister at the time (Paul Goldsmith) still have flagged away criminalisation, at least for cases like this? And would the Commerce Select Committee has been as willing to give the shipping lines such a soft pass on collaboration?

Monday, 21 August 2017

What a bestiary Aussie politics is these days - and I don't mean the dogfights over second citizenships, though it would be nice if some of the oddballs who got in at the last election have at least one Irish grandparent, making them Irish citizens by descent and ineligible to keep their seats.

Away from the citizenship headlines, some of the pollies have been up to an unpleasantly protectionist bit of business which has seen the Aussie government rat on its previous commitment to consumers to allow some second hand car imports into Australia.

Infrastructure Minister Paul Fletcher's media release, 'New Road Vehicle Standards Act to Better Protect Consumers and Provide More Choice' (!) was dolled up in the dress of consumer welfare ("appropriate consumer awareness and protection arrangements") but none of the arguments he made looked convincing. The world Fletcher painted - of high administrative costs and no big net benefit to consumers - bears no relationship to the reality we've experienced in New Zealand. A reference to "price reductions estimated to be less than 2 per cent across the market" in particular looks a very lowball number, and I suspect the "across the market" reference, decoded, means "not a lot of change for some, but quite large reductions for others". As well as not conforming to the facts as we have actually lived through them, maintaining the ban flew in the face of advice from a variety of Australian bodies including the Harper review of competition policy.

Perhaps, despite their flimsiness, the Aussie government believes its justifications, but that may not all that is going through its mind. For the Aussie Financial Review, "It is understood that heavy lobbying by politically influential car sellers - as well as backbenchers such as John Williamson, Warren Entsch, Andrew Broad and Ian Macdonald - prompted the government to dump the option" (in 'Car buyers lose out as government backflips on parallel import rules', which may be paywalled, but if you haven't got a sub, get one). Whatever the government's possible mix of intentions, an end effect was to do a big favour for a small, and, let's face it, rather unloved set of characters at the expense of doing a big favour for many millions of car buying households. And where, incidentally, were those tribunes of the people, Australia's Labor Party? They went along, too, as quoted in the AFR article.

A week earlier, by the way, the ACCC had come out with its draft market study into the selling of new cars. The media release said that "Complaints to the ACCC about new car manufacturers have risen to more than 10,000 over the past two years. Our draft report highlights the urgent need to address widespread issues in the industry". Not, in short, a sector that deserved ongoing favourable treatment, and I'd argue that the protectionist moat they're allowed to live behind is precisely the source of those "widespread issues" the ACCC found.

This latest proactive ACCC market study was another good example of the progress market studies can make to advance consumers' interests and promote more effective competition. So it's a shame that our own Commerce Commission isn't going to be able to do the same thing. As MBIE has said (at the foot of this webpage) the Commission isn't going to be able to start ones off its own bat: "The Commerce Commission’s market studies power will only be exercisable at the direction of the Minister of Commerce and Consumer Affairs", and then only after the Minister has satisfied an (as yet to be defined) "I smell a rat" test.

Still, it's something, and I suppose we should be somewhat grateful for the half a loaf we've got, or might eventually get. " Parliament", MBIE says, "will need to legislate for change to the Commerce Act for the market studies power to be introduced".

Oh goody. The most recent change to the Commerce Act - the Commerce (Cartels and Other Matters) Amendment Bill - took only five years, ten months and one day to go through the sausage factory.

Thursday, 17 August 2017

Collaborative working groups are a necessity in many industries: if you want your luggage transferred from one airline to another, or exam results at one university credited to another, or a gizmo to work in a USB port, you're going to rely on the backroom folks who have got together and worked out the protocols that make it all happen. Consumers unambiguously benefit.

Industry associations can sometimes go over the (not always obvious) line between consumer-friendly collaboration and producer-friendly collusion. The latest in the gun may be technology working groups in the German car industry, which are alleged to have colluded on collectively introducing cheaper but less effective technology to control diesel engines' exhaust. The airlines went too far when they colluded on air cargo surcharges. And it was interesting to note that the Commerce Commission's latest Competition Matters conference had a session on 'The anti-competitive potential of industry groups', possibly signalling that they've become an issue of greater interest locally, too.

But as a reminder of the large amount of welfare-enhancing cooperation that well-meaning working groups can achieve, here's a question for you: where did the time zones in the US come from?

A lot of people tend to assume it must have been the guv'mint. But as this plaque on the corner of La Salle Street and Jackson Street in Chicago reminds us, it was actually entirely the work of the private sector. The US railroads got together on the site of the plaque on October 11 1883, agreed on four time zones each an hour apart, and implemented the whole thing five weeks later on November 18. As soon as they did, it became immediately obvious that this was a hugely sensible idea, and everyone else, including the federal and state governments, fell in behind.

Can you imagine a modern western government managing to do anything as effective as quickly as the railroads did? As it was, it took the US government more than 34 years to formally ratify what the railroads arranged in five weeks.

Welfare economists are fond of 'Pareto optimality', but real life examples tend to be hard to find. I'd like to propose the US time zone setting: there can't have been anyone much inconvenienced by dropping the old system, and uncountable numbers of people had their lives simplified.

Saturday, 12 August 2017

You can read all the official data and reports you like, but I reckon nothing quite beats the insights you get from a spot of Economics By Walking Around - though an alternative interpretation is that I never quite switch out of my economics day job, even on holiday. Either way, and based on my first visit to the US in a long time, here in no particular order are what I found.The US economy's doing fine - One of the things I always look out for in any country is the 'help wanted' signs in the windows: they're an excellent indicator. My trip wasn't a representative sample (San Francisco, Seattle, Portland, Chicago) but the short answer is, 'Now Hiring' signs were all over the place. The official labour market data for July came out when I was there: 209K new jobs, a rise in the participation rate, and a drop in the US unemployment rate to 4.3%, lower than ours.

You ain't seen nuthin' yet - all that hype about Uber and Airbnb and all those other online disintermediary threats to the established order? Believe it. They've become the new way of doing things. At the Navy Pier tourist trap in Chicago, for example, there are now designated pick-up points for Uber and Lyft (a competitor, and one we happily used). I wouldn't necessarily assume, as I think some investors do, that all of these markets are going to be network-effects-driven 'winner takes all': we found Lyft at least as good as Uber, and HomeAway better than Airbnb, and coexistence may be more likely than one-firm domination, or alternatively, they might default to one winner, but it may not be the current front-runner. And while investors could well be somewhat overexuberant, I can now see a bit more clearly why the sharemarket is prepared to pay 18.3 times expected earnings for the US IT sector. It's on a roll.

We are not alone - go to Seattle and Portland and you'll hear exactly the same sentiments about the housing market as you'll hear about Auckland's: first homebuyers can't get a look in, outsiders are buying up what's available, lower and middle income people can't buy homes near where they work (it's far worse again in San Francisco and the wider Bay area, and has been for some time). So we oughtn't think Auckland is a problem entirely unto itself: it's an outcome, like the US markets are, of generationally low interest rates, overall economic growth, regional concentration of growth sectors, demographics (including internal and external migration), and assorted supply constraints (notably planning and NIMBYs).

Public transport can work - there are days when I throw up my hands at the mismanaged mess that is Auckland transport, including the day we got back and tried to get through the chaos that is Auckland's North Shore, on a rainy day, towards the end of rush hour, with the schools back. Yet there are cities in the States who have made the thing work. Import someone from San Francisco or Portland, give them plenipotentiary powers and $5 billion a year, and tell them to get on with it. Preferably including light rail.

Are we falling behind? 1 - we like to think we're a bit ahead of the curve when it comes to social policies, but we're just tiptoeing towards issues like cannabis when it's already completely legal in some US states: we saw highway billboards in Seattle, for example, plugging the Ganja Goddess brand ("Taking Seattle cannabis to a new high"). Similarly with the taxi over-regulation revealed by Uber: the US has got on with it, we're still working it through. And it would be an interesting question which country is now the more regulated overall. Random examples: you can buy melatonin (a jet lag/insomnia thing) in your US supermarket, it's more tightly controlled here; cigar stores haven't been hounded out of existence in the US; you can buy your spirits in a San Francisco supermarket, you can't here; and dogs are welcome everywhere (including supermarkets and craft breweries), and nobody dies.

Are we falling behind? 2 - America's now our biggest export wine market. Excellent: looks like we're making great headway. Only we're a one-trick pony (Sauvignon Blanc, 86% of all exports by volume) that may be peaking - in a supermarket I saw one of our Savvie brands pitched as "low price, high quality", not where you want to be - whereas the quality of the US product is rising by leaps and bounds (try some outstanding Oregon Pinot Gris sometime). Ditto their beer and (at long bleeding last) their coffee.

We're still ahead - we're not perfect, but we have a more effective safety net than the States does. Very public homelessness and untreated mental illnesses are everywhere, particularly in San Francisco. And we should make a takeover bid for Washington state, because we sure would work it harder than its current farmers do.

The pollies have lost the plot - are the US politicians addressing issues like the homelessness? No. On the wall at breakfast in our Chicago hotel were three huge TV screens, one each for CNN, Fox, MSNBC. All of them were broadcasting as their big story - welfare? growth? homelessness? - no, a nasty intra-conservative row about whether President Trump's National Security Advisor was conservative enough. At the same time the pols were trying to restrict ordinary families' insurance access to the world's most exorbitantly priced medical care. Everything you've read about the intensely partisan and deadlocked US political system falls short of the disgraceful reality.

One step forward, one step back - we did the tourist things, especially art galleries. On the plus side, US galleries no longer care whether you photograph the exhibits (other than ones that would be damaged by camera flashes), even the ones in special exhibitions (we did Munch and Gauguin). On the minus side, when are they going to install ticket-vending machines and get rid of the entrance queues? San Francisco's Museum of Modern Art, that means you. The problem is, they're addicted to price discrimination (oldies/students, residents/nonresidents, members/nonmembers) but they've forgotten about the costs of running it. The ferry from West Seattle to downtown Seattle, for example, dispenses tickets on an ATM honesty basis (you can pick the 'senior' option if you want), and the sky doesn't fall.

A word of caution - I spend a lot of my time in front of a computer screen, so I've got a large 17.1" screen laptop. But taking it through US airport security currently makes you a marked man. As well as the whole body scanner that everyone goes through, twice I got picked out for the full pat-down search and the chemical swabbing. No dramas in the end, they let me through, and I understand what they're worried about. Just be aware, if you bring your own laptop, it'll be a bit of a performance.

Friday, 11 August 2017

The prospect of some long distance air travel prompted me to reach for something big and chunky from one of the many books on my bookshelf I've always meant to get round to. Eric Roll's A History of Economic Thought and George Sabine's A History of Political Theory - both unfinished since my undergraduate days - were in the frame, but I eventually settled on Robert Skidelsky's one-volume biography John Maynard Keynes 1883-1946: Economist, Philosopher, Statesman.

Eight hundred and fifty three pages later, I'm glad I did. It's a great book: intelligent, comprehensive, balanced. You'll know before reading the book that Keynes was right on two big things - German reparations after the Great War, 'Keynesian' demand management to avoid slumps - and instrumental in creating two institutions (the IMF and the World Bank) desperately needed post World War Two. These are well covered, as are other good calls (eg on the UK's poor decision to go back on to the gold standard in 1925) but you'll also discover that Keynes could be wrong on a lot else. He was, for example, as prepared to resort to protectionism in the Depression as the justly maligned Smoot and Hawley, and supported cartels as a device to prevent deflation (as did Roosevelt's 'New Deal'). His speech in Dublin in 1933 to the assembled Irish worthies pandered to their nonsensical 'self-sufficiency' programme. In a way, though, that reflected another of his great abilities: his willingness to adapt his message to the audience made him a formidable player of the British and international civil servant game, prepared to compromise and adjust to get the core of what he wanted through an often ignorant and hostile policy process.

A big theme of the book is his outstanding intelligence (albeit too often deployed in a brutal take-no-prisoners style): Bertrand Russell said in his autobiography (and requoted in the book) that Keynes' intellect was "the sharpest and clearest I have ever known. When I argued with him I felt that I took my life in my hands, and I seldom emerged without feeling something of a fool". Others recognised it, too. At the formal dinner ending the Bretton Woods conference which created the Fund and the Bank, "as he [Keynes] moved slowly to the high table, stooping a little more than usual, white with tiredness, but not unpleased at what had been done, the whole meeting spontaneously stood up and waited, silent, until he had taken his place. Someone of more than ordinary stature had entered the room".

Another excellent book I've finished is the second edition of Economics for Competition Lawyers, by three of the people at Oxera, Gunnar Niels, Helen Jenkins, and James Kavanagh. For all I know, this is already the established font of all knowledge for lawyers required to come to terms with the black arts of competition economics, but if it isn't already, it ought to be: it's an absolutely first class textbook. It goes out of its way to make the economics accessible to non-specialists, and even economists will get a lot out of it. I wish I'd had it to hand sixteen years ago when I was first appointed to the Commerce Commission, and I'd say that every other Commissioner appointed since then would have felt the same way. Very few of us came to the Commission with a deep knowledge of the area - the economists tended to have serviceable general purpose economics rather than a specialty expertise, and the non-economists had little or nothing - and a comprehensive guide like this one is exactly what we all needed.

It covers everything you'll need to know, from the absolute basics of supply and demand through the core areas of market definition, market power, abuse of dominance, cartels, vertical restraints, and mergers to the design of remedies (often overlooked) and the quantification of damages, and finishes with a very useful chapter on 'The use of economic evidence in competition cases'. I found myself agreeing with virtually everything they said, with the exception of what I thought was an over-charitable view of 'pay for delay' agreements (where patent-holding pharmaceutical companies pay producers of much cheaper 'generic' drugs not to produce). There may well be cases, as they say, that are genuinely welfare-enhancing, but as I've argued before, it's generally not the way to bet.

But that's a minor quibble: this is a highly practical guide to a wide and complex field that takes you from ground zero to close to the cutting edge, and is thoroughly recommended. New Zealand, by the way, gets the odd look in: two cases are cited, Oh Bloody Eight Six Seven in the context of what the Baumol-Willig rule is all about, and Air Cargo (where the authors acted for the Commission) on the geographical dimension of market definition. If you missed it, by the way, the very last act in the Air Cargo market definition bunfight has just played out in the Australian courts.

There's a school of thought that says too much choice can bamboozle consumers, who'll resort to rules of thumb (possibly missing out on their best options) when confronted with menus that are too big to come to grips with. I'm not a great fan myself, but I saw the point when I got into Powell's City of Books in Portland, Oregon, the world's largest bookstore. Before my faculties melted down completely, however, I did manage to buy Niall Kishtainy's new book, A Little History of Economics. Kishtainy, a lecturer in economic history at the London School of Economics, has done a very clever thing: produced a 'what is economics all about anyway' book through the medium of a history of economic thought. It works a treat, and is also handsomely produced. If you wanted to get someone interested in economics, this should be high on your list.

Welcome to my economics blog

“The remarkable thing about economics is that once you've been exposed to the big ideas, they begin to show up everywhere … Economics offers insight into wealth, poverty, gender relations, the environment, discrimination, politics...How could that possibly not be interesting?” - Charles Wheelan, Naked Economics: Undressing the Dismal Science, 2002

"The soundest argument for markets ... is simply that, very frequently, they are the least bad of the alternatives. To paraphrase Winston Churchill's remark on democracy, markets are the worst form of resource allocation, except for all the others that have been tried" - Prof George Yarrow, Three Lectures on Privatization, Jagiellonian University, Krakow, April 1990

"And if there's one thing we've learned about flawed markets, it's that people flee from them, either physically or by resorting to back channels and black markets. Either way, flawed markets can undermine not just communities but whole nations" - Alvin Roth, Who Gets What - and Why, 2015

"Economic controversy is generally a thankless task. You cannot hope to make any impression on your opponent. Yet he is the only reader on whose interest you can count" - Francis Ysidro Edgeworth, Economic Journal, 1898

"There is some evil genius which sits at the elbow of every economist, forcing him into all sorts of contorted and unnecessary complications" - John Maynard Keynes, letter to Roy Harrod, August 1935

"We are here and it is now. The way I see it is, after that, everything tends towards guesswork" - the philosopher Didactylos, in Terry Pratchett's Small Gods, 1992

"I have never yet seen any plan which has not been mended by the observations of those who were much inferior in understanding to the person who took the lead in the business" - the blogger's creed, as foreshadowed by Edmund Burke, Reflections on the Revolution in France, 1790

"They acted as their situation naturally directed, and they who have clamoured the loudest against them would probably not have acted better themselves" - advice to Twitterati, as foreshadowed by Adam Smith, An Inquiry Into The Nature and Causes of the Wealth of Nations, Book IV, 1776